Crude Observations

Which list are you on?

Well this has been an eventful year, filled with ups and downs. Market gyrations, pandemics, elections, conflict, Bitcoin, Trump, energy market meltdowns and recoveries, negative prices, skyhigh valuations for tech, record low valuations for energy, transitions, Brexit, Wexit, Texit – you name it.


The funny thing about the end of the year is that there is always a rush of news leading into it and then it goes quiet. It just seems so volatile now and we don’t know where things are ultimately going to land, but with a vaccine and election certainty and days getting longer it seems like there is a light at the end of a tunnel. Hoping it’s not the proverbial oncoming train, but we’ve seen worse this year.


What is a poor blogger to do when confronted with all this mayhem and change during a year? I know what I do. I take a holiday break and catch my breath. Calm down, realize that I can’t control everything and concentrate on what is within my grasp.


And then I steal Santa’s naughty list to see what is really happening. I know, I know. Pretty poor timing to steal from Santa, but I do it every year and it seems to work out. There was that one year where I intercepted a bunch of Christmas lists, but it went sideways pretty quickly because I forgot to put them back in the mail and no one got anything. Hillary Clinton still hasn’t forgiven me for missing out on her election win.


At any rate, I digress – what was my point?


Well with it being such an eventful year, there have been some changes to the list, some additions and some subtractions. And as always, it is up for interpretation as to relativity. For example, in some years, Vlad “the Impaler” Putin has been naughty and in some he has been nice. As with all lists it evolves and is really a relative ranking.


But certain rankings are really self-evident.


Donald Trump – Naughty


Donald Trump is almost a permanent entry on the naughty list. This is the 85th year in a row on the naughty list for young Donald. He was on the naughty list before he was born. It was expected that being President might soften the Don and that spending a few years under the thumb of Nancy Pelosi would bring to him a more conciliatory perspective. Nope. Rather than make nice, last year Donald doubled down, perfectly shaking down the newly elected Prime Minister of Ukraine in order to gather dirt on his presidential political rival (Joe Biden) and doing it so clumsily that he got himself impeached. This year he has really dialled in the naughty with his early and late mishandling of the Coronavirus response (to be fair, there was a period in the middle, before he got bored and distracted by the election where he actually did some good). But the real kicker has been his complete abdication of responsibility to the American people post-election and his disparaging of electoral and democratic norms via his ongoing conspiracy theory driven challenging of clear election results and the self-dealing fund-raising that is companying that. Put another way – if you are a sore-loser and a grifter on top of that, you are on the naughty list. Just the way it goes. DJT’s gift is going to be a retirement from the limelight and a slow drift into irrelevance.


Rudy Giuliani – Naughty


I usually avoid looking up the fate of low level stooges like this, but I couldn’t help it this year given his prominence as the grifter in chief in trying to dig up dirt on Joe and then Hunter Biden, association with various and sundry international crooks and, bizarre press conferences. His unhinged lunacy is overshadowed only by his colossal incompetence, Rudy’s place on this list is well-earned. As someone who watched him rally a country after 9/11 and who believed his rep as a hard-charging take no prisoners prosecutor, this fall from grace is particularly jarring. Graft, corruption, makeup… Rudy’s gift is a celebrity spokesman gig for a sex shop next to a landscaping business.


Boris Johnson – Naughty


Boris comes by this honestly. He’s just a bad person. Notwithstanding his recent conversion to environmentalism and climate change or the fact he got COVID and survived and is doing his nest to get through the crisis, Boris maintains his place on this list for trying to ram through a deeply unpopular Brexit deal at all costs, thereby pushing the UK into year 5 of political and economic uncertainty, and for being a despicable clown. His gift? A retirement home in Majorca he can’t use.



Greta Thunberg – Nice. Sorry


No. Not sorry. I like Greta. I don’t agree with everything she says or stands for. And she wasn’t much of a newsmaker this year. But I like how easily she triggers and makes the old white guy cohort squirm and bleat and run around in circles in cataclysmic self-righteousness. Last year, all she had to do was show up somewhere and the rage and the anti-Greta people lose their minds. This year, she is doing it on Twitter and the reactions are the same. Anyway, Greta – I think there is a depth to the issues that she misses, but seriously folks, is it really that terrifying to have a young person so engaged in the major issues of the day? Is climate change a problem? Yes. Is it man-made? Not entirely but enough to make a difference. Are politicians playing a game as she claims? Absolutely – most don’t care about climate, it’s all about re-election. Should fossil fuel companies quake in their boots? No. Carbon-based energy will be required for decades. Does she have a point and should we listen to her? Absolutely. Our kids are being raised to be activists. Social media connects them. They are less than a decade away from kicking us to the curb. Pay attention. The gift to Greta? With the pandemic fears fading thanks to the vaccine, people are paying attention to climate and what humans can accomplish with coordinated action. People listening and engaging. And an apology on behalf of old white guys everywhere. We aren’t all that thin skinned and frightened. I can defend my energy industry and hear your words.


Justin Trudeau – Last year was probationary, this year he gets on the nice list.


There was a lot of debate on this one. Where does he fit? Great socks, fabulous selfies, but… a giant mess when it comes to policy implementation, pipelines under construction, an energy sector wondering which way is up with carbon taxes and renewables, relations with China, India and the US completely off the rails and an economy running on fumes. Then the pandemic hit and he was able hit the Liberal Party of Canada big government go-button and a tsunami of cash saved the country and the economy. Sure we have major issues and some of the cash has gone to dubious programs but does anyone have any doubt that we have managed to cushion the blow more than other comparable economies? And carbon tax notwithstanding (don’t be afraid, there’s rebates!), the support and programs keep coming. There is a limit of course, but he has done a good job. There, I said it. DIdn’t hurt anywhere near as much as I thought. This year’s gift? Accountability, a spring election (his to lose!) and a referendum on Equalization (hey, it can’t all be good).


Joe Biden – Nice


How can you not put Joe on the nice list? He’s Grandpa Joe! Everyone’s go to for empathy and a socially-distanced shoulder to cry on. He slew the dragon against all odds and, temper tantrums by the Donald notwithstanding, is bringing a sense of normalcy and quiet competence back to the most important political office in the world. He is boring. He is quiet. He rocks his aviators and drives a vintage Corvette. Sure he may cancel Keystone XL, we knew that risk. But stability? Predictability? That is worth so much more. Joe’s gift? A peaceful transition to power on January 20th, some luck and some compromise from his opponents.


Jason Kenney – Naughty


I know a lot of people won’t be happy with this, and it was debated pretty intensely. This ranking is less to do with his response to the pandemic which he has tried to allow the bureaucrats to run. Rather it is his ideological rigidity in the face of a rapidly changing political, social and economic reality that keeps him in the naughty ranks. Whether it is waging a war against doctors during a pandemic, subsidizing pipeline businesses, being myopic about the energy sector, fixating on things he can’t change like equalization, avoiding things he can change like a sales tax, pandering to the looney tunes right, enabling his twitter henchmen, selling off parks to coal developers (come on), the inability to get off the ideological train risks making him a one hit wonder. Alberta has changed, fundamentally, since the UCP won election. Until that is acknowledged, it will be hard to get off the naughty list. The UCP has plenty of good ideas but they should slow down and look around. Gifts for Jason this year include patience, humility and some low poll numbers to bring him back to earth. Ex-COVID, the UCP may have been on the right track, right now they are just a runaway train. Speed kills.



Erin O’Toole and the Conservative Party of Canada – Naughty


So Andrew Scheer stepped down and they had a leadership race during a pandemic. Well done. They selected Erin O’Toole. He seems like a decent enough guy, the sort to win back the suburban vote. But the poll numbers keep cratering. What is up with that? Sadly, a lack of leadership. The CPC has become a mockery of itself and is adrift, the new leader was supposed to change that. Whether it is the anti-vax petition of Derek Sloan or the parliamentary antics of Pierre Poilievre and Michele Rempel-Garner (the member from Oklahoma) and the butchering of messages about vaccine roll-outs and the WE scandal and now residential schools, one has to ask – is anyone adult in the room? Erin O’Toole – Step. Up. Take control of your party. You have an election coming in the spring most likely. Get it together and present a credible and stable alternative to Liberal largesse. Accountability and jobs. The economy. That should be your singular mantra. You aren’t going to flank the Liberals on pandemic response. Get it together. Rein in the clown-show. Erin’s gift? A broom, to sweep out the deadwood. A policy book to follow. A louder voice to drown out the crazy.



Shale Oil – Naughty and Nice


Wait. What? How can shale be on both lists? Well, shale, as a general rule, has been on the naughty list since 2014 when runaway production growth upended the energy market and caused our current six years and counting disaster. In particular, the Permian has been a blackhole for capital, sucking up investment that might otherwise have gone elsewhere (Oh Canada!) all in the relentless pursuit of production growth at all costs, right here, right now. But the light tight oil moment, such as it was, has come to an end. Which is nice. Look, production and investment in US light tight oil plays is going to continue, there is no doubt about that, but with the ass-kicking the sector got from the Saudi-Russia price war and the pandemic and capital discipline now being applied by lenders and investors, the go-go days are for now in the rear-view mirror. What about American energy independence? Well, production is down significantly but not exsitentially and rig counts are slowly re-inflating. But that, Joe Biden and a handful of environmentalists in every critical energy related cabinet post isn’t the underpinning of a boom. Anyway, shale’s gift? Capital discipline, some free cash flow and a maintenance business model, which is actually what we all want.


Canadian E&P’s – Nice


It has been a tough year for the Canadian oilpatch, there is no way to sugar coat that. The year started with layoffs and is likely to end that way. However inside of that was some much needed consolidation to achieve market scale, a renewed “Canadianization” of our little patch of oil (second largest in the world, ahem) and some long overdue attention from the markets who have suddenly come to the realization that above a certain price-deck, Canadian oil and gas companies, in particular oil sands companies and, to a lesser extent, nat gas players are cash flow generating machines. Gift – pipelines, bought deals and institutional interest.


Oil and Gas Investors – Nice


After suffering through what is arguably the worst three quarters the energy industry has ever seen, the energy industry has been on a tear since the election of Joe Biden. Go figure. While I am sure most investors have simply rolled their cash into Tesla, for theones who decided they were masochistic enough to stick with it, they are now participating in what may be the greatest value play in history. Gift? Positive annual returns.



Saudi Arabia and OPEC/OPEC++++++ – Nice


Aside from the colossal blunder of an attempted price war with Russia in the early part of the pandemic, which really helped no one, Saudi Arabia has since done a fine job this year being respectful of the “cuts” they made to oil production in their largely self-serving goal of stabilizing prices to avoid sovereign default. And they have kept the greater OPC and OPEC + crew in line and the resulting stability has allowed the Canadian energy sector to survive. An appropriate gift in return for keeping prices steady? Well if Kushie had his way it would be nuclear technology but that isn’t going to happen, so how about normalization of relations back to the way they used to be.



Trans Mountain Expansion – Nice


Pipeline projects in general have been nice this year, especially if you measure niceness as a function of patience and calm in the face of absurd opposition. I don’t know how you can file an application for a project, spend a billion dollars, get denied for political reasons, spend another billion, become a political football, get denigrated, demonized, misrepresented and otherwise vilified for years and still be at the table with a smile on your face, ready to spend capital to create jobs, opportunity and prosperity for the biggest set of ingrates that exist. And that was before the Federal Government bought it. But buy it they did and the project is full speed ahead. That’s right, the Pierre Elliot Trudeau Memorial Pipeline is underway, on budget and on schedule. Gift? A safe operating environment, higher prices and higher tolls.


Energy East Revivalists – Naughty


Unfortunately, some people suffer EEDS, Energy East Derangement Syndrome, characterized by a misplaced belief that this massive (and massively uneconomic) project has a snowball’s chance in hell of being resurrected. The proponent is out. The refinery the product it was going to is out. There is no will to fight the political battle to make it happen. And ultimately it doesn’t make sense anyway. Get me to ports on the West Coast and the Gulf Coast and we can talk about maximizing value. Build a pipeline to the East and sell discounted oil to a New Brunswick refinery? Stop it. Gift: A map of Canada.


Vladimir Putin – Nice


OK, I get it, his Vladness is a despot, but has he really done anything this year to merit a spot on the naughty list? Aside from trying to kill the opposition leader in Russia, hacking into the US government and thousands of American businesses and doing that wacky price war with Saudi Arabia? OK, so there’s the whole global domination stuff and his manipulation of Trump but who would you rather have doing that, China?  It’s arguable that his ability to control Russian oil production has been vital for the Canadian energy industry. Look, the naughty list is all about redemption – every year is a fresh start, well except for Trump. So for Christmas this year Vlad gets to be President of Russia for another 600 years and a pre-arranged marriage to Ivanka. Plus a lifetime supply of tear-away t-shirts and a horse so he can do the bare-chest/bare-back thing on a moment’s notice.


People in Calgary and the Energy Sector in Western Canada in general – Nice


It’s been a long six years. We can’t give you another boom, but I think it’s fair to say that the pieces are slowly assembling to allow for a recovery. Seriously, cautious optimism folks! Things are looking up!


#Wexit – Naughty


Seriously folks, what is this all about? What are you trying to accomplish aside from drawing attention to yourselves. Look, I get “western alienation” but this isn’t the way to solve it. I grew up in Quebec in the 1970s and 1980s. I lived through an actual referendum on separation. I know how divisive it can be at the family and personal level. I have lost valuable friends because of my position or their position. And Quebec is an actual distinct society, with a much better case for independence.


In Alberta’s case? What do you solve? Do you solve market access? No! Do you fix the differential? No! Do you reduce your taxes or change the size of the economy? No! Will you get to keep everything (like all the oil)? No! Will there be First Nations support? No! All the money you think you will save on equalization? It’ll just go to the new government. Will yelling at the top of your lungs about how hard done by Alberta is engender any sympathy from people across Canada? No! You come across as misguided crackpots and inevitably get labelled as Quebec hating racists. You want real constitutional change and a better deal from the Canadian government? I’ve got your back. Say you want to become a landlocked state with no egress solutions for all the fossil fuels we will still be selling to only one customer? Don’t waste my time.


Gift for these folks? An all-expenses paid trip to anywhere but here and muzzle. We don’t need you. You aren’t contributing to the dialogue. You aren’t.


#Texit – Naughty


This is suddenly a thing. Stop it. Gift? A copy of the Alamo.


COVID – Naughty


That’s it. No gift.


The American Voter – Nice


That’s right. The voter. Not for the result necessarily, that’s an outcome. No, the listing is for turning up. In the midst of a pandemic, in the face of a truly bizarre campaign filled with misinformation, intrigue, COVID, wacky debates, personality clashes, baseless accusations and Hunter Biden’s laptop, American voters showed up in record numbers and voted the hell out of the election. Some multiple times (heh – Rudy G paid me to say that). Look, you don’t have to be happy about the outcome – that’s how contests work, someone wins, which means there is a loser – but you can’t not acknowledge that the voice of Americans has been heard, loud and clear and they exercized their franchise. Gift? At least two months without a campaign in their face and a return to normalcy.



That’s it folks. I hope I didn’t miss anything! It’s really just the recurring cast of characters anyway.


This is of course my last blog of the year, when you next hear from me I will be reviewing my disastrous forecasts from last year before rolling the dice on my 2021 Fearless Forecast (hint – natgas!).


I do of course reserve the right to send out a Christmas Eve note.


That said, Merry Christmas, Happy Holidays and Happy New Year from us to you in this strange and wacky time.


Stay safe, stay warm, be kind. Reach out to friends and family.


It gets better from here.

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